Bonding Period & Slow Release


#1

Stake Management Part 1

Bonding Period & Slow Release

Co-Authors: Tracie Myers & Luis C. De Leon

Bonding Period
  • Period of time for the staked tokens to mature.
    • Suggestion: 26 Eons (1 Eon = 7 days, total days = 182).
      • Subject to change through governance in the network.
  • After stake is deposited, it cannot be taken out before the end of the bonding period, once it has reached maturity.
  • In the case of unstaking during the bonding period a portion of the stake is burned while a portion is returned; however, there is a cap on how much can be unstaked which is directly proportional to how long the stake has been in the network.
    • Percent of days staked = caped percent to unstake
    • The inverse of the percent of days staked = percent burned
    • Total returned = percent unstaked - percent burned

  • When additional POKT is staked during a bonding period a new bonding period occurs.
    • If the new bonding amount is > old bonding amount
      • New bonding period = ((Days left in new bonding * percent of new stake) - Days left in old bonding) / ((number of times new stake has been added) + Days left in old bonding)
    • If the new bonding amount is < old bonding amount
      • New bonding period = ((Days left in new bonding * percent of old stake) - Days left in old bonding) / ((number of times new stake has been added) + Days left in old bonding)

  • Why have a bonding period?
    • Bonding is the “cost” of using the network.
    • If users are able to stake and unstake based on the market price of the native POKT token, this could destabilize the Pocket Network.
  • Advantages
    • To avoid unstaking right after they joined the network.
    • Provides stability for the network.
    • To have a flexible mechanism to unstake in case of market upswings.
    • Provides a systemic way of burning POKT in case of market upswings, which helps to keep inflation in check.
  • Disadvantages
    • The user’s stake is locked and could face penalty to unstake early.
Slow Release
  • This mechanism starts the moment the user’s bonding period has completed.
  • Users are capped on what amount they can unstake by a certain percentage.
    • Suggestion: 60% once per Eon (7 days)
      • POKT unstaked = (Total staked * 60%)
      • Percentage subject to change through governance in the network.
  • A user can unstake once every Eon (once every 7 days).
  • If a user stakes more POKT after their bonding period has ended this triggers a new bonding period to start.

  • Advantages
    • Ensures there is not a mass loss of infrastructural capacity within the network.
    • Helps stabilize the token price.
    • To disincentivize unstaking.
    • To have a flexible mechanism to unstake in case of market upswings.
    • To avoid users unstake 100% of their stakes at one time.
    • Allowing people to unstake before a bonding period has elapsed incentivizes users to unstake in case of market upswings, diminishing the infrastructural processing capacity of the network.
  • Disadvantages
    • The user can not immediately have access to all of their stake.

#2

Great job on formally specifying this.

Can you expand on why you chose 26 Eons?

Isn’t the new bonding period always going to be greater than the old one? Is there a case where this isn’t true?

I wonder if there’s any research of existing slow-drip mechanisms in conjunction with understanding how it affects token price


#3

This was based on a couple factors:

1. Nodes and developers who joined early could simultaneously leave the network without giving an opportunity for adoption. 26 Eons allow time for new users to join the network and stake POKT.

2. After running a couple of simulations, 26 Eons worked well with both a small amount of POKT staked and a large amount. Meaning, if a large amount was staked and the time was shortened the amount unstaked if sold, could make a larger effect on the market making it more volatile.

Yes, this was an error in wording:

If the new bonding **amount** is > old bonding **amount**.